HomeIndonesiaIndonesian mobile technology company invests in state-owned internet payments enterprise

Indonesian mobile technology company invests in state-owned internet payments enterprise

Indonesian mobile technology company Gojek has invested in state-owned internet payments company LinkAja to further expand the digital ecosystem in a country where consumer habits have changed dramatically due to the coronavirus pandemic.

Gojek’s investment in LinkAja follows on from its Singaporean rival Grab in November, making the platform a unique venture with two bitter rivals invested in it.

Neither Gojek nor LinkAja disclose the size of the investment, but in a joint statement they said that together with these investments, the capital will now exceed USD 100 million. “This funding further enhances our ability to more actively deploy digital financial services and accelerate access to financial services in Indonesia,” they said.

Grab was the lead investor in the funding phase when LinkAja received its first financial support from a non-government-controlled firm in November. Other investors at the time included the venture capital units of the state-owned Rakyat Indonesia Bank and Mandiri Bank.
LinkAya was formed in June 2019 as a result of the merger of digital payment services from 5 different state-owned companies. The move reflects a trend of growing concern of the Indonesian government and its businesses about the threat posed by aggressive expansion of private firms such as Grab and Gojek into the financial services market of Southeast Asia’s largest economy.

However, LinkAja did not manage to gain the same popularity as GoPay (Gojek payment service), OVO is a digital wallet, partly owned by Grab, which has proven itself from the better side. Meanwhile, ShopeePay, a payment service from Singapore-based Sea, has burst into the Indonesian e-wallet market, which has already taken over a significant portion of it through aggressive advertising campaigns. However, LinkAja’s recent investments from Gozek, Grab and others should help keep the firm competitive.

Industry insiders also said the investment is a demonstration of the intentions of both tech giants to work alongside a state-owned enterprise rather than being a direct competitor looking to outperform LinkAja.

Electronic payments have become an important part of Indonesian life during the pandemic as fears grow over whether using cash could increase the risk of contracting the coronavirus.

Transaction volume in the fast-growing Indonesian digital payments market dropped 11% in 2020 compared to 2019, as people stayed home more often last year, reducing the use of electronic payments to pay for things like ride and daily shopping. However, the value of transactions rose 41% over the same period as users increasingly use digital payment services to purchase expensive tickets on e-commerce sites.

Fresh news

Related news